Under a rare deal with the federal government, Parkland Memorial Hospital will become the largest hospital in the nation forced to hire independent safety monitors to ensure that patients do not face needless risk of death or disease.

The “systems improvement agreement,” which Parkland is expected to finalize with the U.S. Centers for Medicare & Medicaid Services this week, marks only the fifth time that such a stopgap measure has been used at a hospital.

Without the agreement, Parkland would face a cutoff Friday of hundreds of millions of dollars in government health care funding because of systemic patient safety failures identified by CMS. Such a funding loss — representing about half of Parkland’s patient revenues — could have closed the public charity hospital and led to what officials called a “devastating” scenario for the entire Dallas County health care system.

“This is Parkland’s last best shot,” said David Wright, deputy regional administrator for CMS. “It gives the community time and hopefully makes everyone recognize how integral the viability of Parkland is to the community.”

More patient harm

Officials from Parkland and CMS were finalizing the agreement late last week even as government regulators reported uncovering new cases of patient harm in their latest inspection. Parkland said it was taking “corrective action” on the new problems.

“We will continue to take all necessary steps to ensure our patients receive the highest quality health care,” the hospital said in a prepared statement. “As such, we will continue to cooperate fully and work in partnership with CMS to resolve these problems.”

Under the terms of the SIA, as the systems improvement agreement is known, the 735-bed public hospital will continue to receive federal funds for at least a year. But it must contract with private consultants to study the hospital’s problems and help reform practices in its emergency department, infection control and psychiatric care, among other areas identified as deficient by regulators after several inspections over the summer. Parkland also must hire an on-site compliance coordinator.

CMS will approve the hiring of monitors. It also will receive updates on continuing problems before they are presented to hospital administrators, as well as on Parkland’s progress toward achieving compliance, CMS officials said.

In an interview with The Dallas Morning News on Thursday, CMS’ national administrator said Parkland is too “essential” to the community to be closed without a chance to reform.

‘Diligent improvement’

“This community would be obviously seriously hurt by the termination of Parkland, and we would like to avoid that,” Dr. Donald Berwick said. “They have to be serious about it, and we have to be serious about it. I think that ongoing scrutiny, making sure that diligent improvement is under way, is key.”

SIAs are still relatively rare, Wright said, and the decision to accept monitors is no guarantee that Parkland will succeed. Dallas community leaders should be preparing a contingency plan to deal with Parkland’s patients in case the hospital does not return to compliance, he said.

If Parkland fails to reach compliance with requirements for Medicare-Medicaid funding, Wright said, “what we’d have to do is work out a system to deal with the increased patient load. We’d at least need to have several months to put an alternative plan in place. Our hope is not to have to go there.”

Only four other hospitals — two in California and one each in Arkansas and Missouri — have been allowed to operate under SIAs after the discovery of crisis conditions, according to CMS, a division of the U.S. Department of Health and Human Services. Those hospitals, all with 200 beds or fewer, are still being monitored.

CMS said it began using the agreements in 2007 with nursing homes to try to turn around “chronically noncompliant” facilities rather than close them, leaving patients with limited options for care.

The aim was to give the nursing homes one last chance by hiring independent consultants — companies or people with no recent business ties to the facilities — to identify problems and fix them, all while keeping regulators briefed.

A March 2010 report by the U.S. Government Accountability Office noted that 10 such agreements had been extended to nursing homes, with mixed success: Four nursing homes eventually returned to compliance; two failed. Four more were still working under the SIAs at the time of the report.

CMS’ first use of an SIA for troubled hospitals grew out of a court settlement with Pennsylvania-based Universal Health Services Inc. The national corporation operates health care facilities across the country, including three of the four hospitals under monitoring agreements.

In 2008, CMS moved to terminate funding for the company’s Two Rivers Psychiatric Hospital in Kansas City, Mo., citing patient care violations, after an Army soldier used bedding to hang himself in a closet.

Two Rivers fought the termination decision in court, and an SIA was part of the settlement. But the hospital failed to achieve compliance under the first SIA, Wright said. This past spring, another patient committed suicide, and CMS agreed to a second SIA.

Unproven tool

Asked whether CMS has sufficient power under SIAs and other regulatory tools to force improvements at hospitals, Berwick said he believed so. But he acknowledged that the effectiveness of SIAs remains to be proved.

“I think if we are able to successfully execute a systems improvement agreement — and we will watch very, very closely — I think you will watch the hospital [Parkland] get even more serious than it’s ever been before,” Berwick said.

The only other hospital under an SIA in the five-state CMS region that includes Dallas is the Arkansas State Hospital, a psychiatric facility that signed the deal with the government in July. The agreement came after CMS found that treatment failures and improper use of restraints and solitary confinement had led to “continuing violence” among adolescent patients. The first reports on the Arkansas facility’s progress are just coming in, Wright said, so it’s too soon to gauge whether the SIA is working. So far, the agreement is projected to cost the hospital more than $1 million.

The events that pushed Parkland to the brink of collapse began with the February death of a psychiatric patient who had been forced into isolation and aggressively restrained. The hospital did not report the death to state and federal regulators, as required. They learned of it from a report in The News. That triggered a series of sweeping government inspections in July and August that found systemic problems in emergency services and infection control that put Parkland patients in “immediate jeopardy.”

Years of problems

But the hospital’s patient-safety problems go back years. Parkland has been cited by CMS at least 10 times since 2006 for patient care failures and other problems. And recently, the U.S. Justice Department signaled a sweeping investigation, requesting Parkland documents dating to 2008; at least one focus is psychiatric services.

Dr. Lawrence Prybil, associate dean and professor of health-services management at the University of Kentucky, agreed with CMS officials that Dallas County leaders must begin exploring how to sustain the teaching hospital — for the short and long haul.

The hospital has a contract with UT Southwestern Medical Center to share responsibility for overseeing resident doctor trainees and setting standards for faculty physicians’ role in patient care. UTSW doctors make up most of the staff at Parkland.

‘Very, very rare’

“This type of situation is very, very rare in the hospital field,” said Prybil, a researcher on hospital governance who has read The News’ coverage of patient-safety issues at Parkland and UTSW. “Everyone should want Parkland to succeed because it is such an important institution. But the fundamental problem, it seems to me, is its governance and management, including its relationship with UT Southwestern Medical Center, and understanding whether that’s appropriate.”

At least twice since 2004, outside consultants have questioned whether Parkland’s contract with UTSW for doctors is the best way to serve its patient population.

Trying to repair quality-control problems is the immediate challenge, Prybil said. The bigger question is figuring out how Parkland can operate safely and effectively in the future, he said, and that could mean considering a number of changes, from determining how to hold the hospital’s board of managers more accountable to changing the hospital’s ownership.

“Everyone needs to pitch in to find a solution,” Prybil said.

Contingency plan

Dallas County Judge Clay Jenkins heads the county Commissioners Court, which appoints the Parkland board. He said he is in talks with health care experts and CMS officials to explore a contingency plan in case Parkland fails to return to compliance.

But he said he has confidence that Parkland’s new board of managers will ensure that major improvements are made in the hospital’s practices. He also said UTSW must emphasize patient safety as much as it does research.

“We’re doing everything we can to avoid the unthinkable and prepare for the unthinkable,” Jenkins said.

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UT Southwestern Medical Center and Parkland Memorial Hospital are known for their contributions to medical research and public health. But have those accomplishments come at a cost to quality healthcare? The Dallas Morning News investigates patient safety and allegations of lax supervision of doctors in training at the public institutions.